Which Company is Right? H-P or Dell?

For personal computer manufactures, the changes in the industry have prompted companies like Hewlett-Packard (NYSE:HPQ) and Dell (NASDAQ:DELL) to take drastic steps, or at least consider them.

Rumors are swirling over whether Hewlett-Packard is considering dividing its business in two parts. The publication Quartz reported on Tuesday that the company’s board of directors “is studying a break-up of the US tech company among several options […] to obtain maximum value for shareholders,” citing multiple unnamed sources. However, AllThingsD’s Arik Hesseldahl tweeted that no active board discussions were underway.

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If the speculation – which began because of a September 27 10-K filing that mentioned a possible “disposition of assets” – turns out to be true, it would be huge reversal for H-P’s Chief Executive Officer Meg Whitman. When she took over from the company’s former chief executive Leo Apotheker, Whitman made it clear that she would not follow his plan to spin off H-P’s personal computer business
While Hewlett-Packard has faced problems from the industry’s shift away from personal computers, earlier on Tuesday, H-P made it known that it would not follow Dell down the path to privatization. The company criticized its rival’s choice to go ahead with the leveraged buyout, noting in a statement that Dell now faces an “extended period of uncertainty and transition that will not be good for its customers.” H-P was referring to the fact that Dell’s “ability to invest in new products and services will be extremely limited” in the coming months, but its harsh assessment has already proven to be slightly true.

Dell has “officially” gone private, and now it will face a period of uncertainty because its shareholders are not pleased with the board’s vote. Shareholder lawsuits have begun. The law firm Levi & Korsinsky has launched a class-action suit filed against the board for “possible breaches of fiduciary duty and other violations of state law in connection with the sale of the Company to its CEO, Michael Dell, in conjunction with private equity firm Silver Lake,” according to a press release.

As indicated by a report in Bloomberg, shareholders would have likely preferred Dell to split its business into one devoted to its personal computer operations and one focused on data-center hardware and software. But the primary sticking point is the price that the buyer’s consortium offered – $24.4 billion – was much too low.

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